Japan’s Nikkei Stock Average Reverses Course to End Higher despite Automakers’ Slump (UPDATE 1)

Reuters

12:08 JST, March 27, 2025 (updated at 16:30 JST)

TOKYO, March 27 (Reuters) – Japan’s Topix index recouped its losses to close higher on Thursday, despite sharp declines in automakers, as investor sentiment was lifted by demand for the index’s futures.

The broader Topix ended nearly 0.1% higher at 2,815.47, recovering from an earlier drop of 0.95% during the session.

U.S. President Donald Trump on Wednesday unveiled a 25% tariff on imported cars and light trucks starting next week, escalating the global trade war he reignited upon regaining the White House this year.

Auto industry experts expect the move will drive up prices and disrupt production.

Japan’s heavyweight automakers slumped as concerns over the potential impact of the auto tariff dampened sentiment.

Shares in Toyota Motor lost 2.04% and Honda Motor fell 2.48% while Nissan Motor slipped 1.68%.

The Topix reversed its course on expectations of strong demand for the index futures, said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute.

Thursday is the last day to secure dividend payouts for companies with a fiscal year ending in March. The majority of stocks will go ex-dividend on Friday, causing a reduction in index points.

Dividends will not be distributed until companies hold their annual shareholders’ meetings in June, but passive investors are eager to invest the cash in advance by purchasing futures to avoid tracking error – the unwanted performance difference between an ETF and the index it tracks.

The Nikkei trimmed its losses to end 0.6% lower at 37,799.97.

Overall, the market reaction to Trump’s announcement was limited because it was within expectations, said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.

“Investors probably expect that Trump will not do anything that could seriously hurt the economy.”

Chip-testing equipment maker Advantest lost 7.44% to become the biggest drag for the Nikkei.

Uniqlo-brand owner Fast Retailing rose 0.65%, providing the biggest support to the Nikkei.